The End Of History Of Corporate Culture Critical Thinking Sample
The end of history for corporate law
The economic environment enterprises dictate the relationship of an entity with its directors and managers, shareholders, government and other interested parties. The move towards stabilization and convergence of corporate governance principles has formed a concrete foundation in the relevance and reliability in corporate systems. Corporate governance is a system of rules, regulation, procedures, and practices that govern the philosophy of running and controlling an entity. The common rule is that all entities are coordinated to attract the interest of the stakeholders, with corporate board and management acting in the capacity of the agents and trustee. The commercialization of corporate controls principles determines the force in global corporate convergence.
Formation of company law has purposely encouraged a global corporate convergence. This has marked a great achievement in model of universal regulation in the protection of shareholders right as well as other interested parties. The result achieved is a direct proportion of the effort applied in the assertiveness and determination towards legalizing the corporate form. The structure of the entity today has been shaped by legal personality where entity is recognized as a separate person different from owners, agency transparency, and limited liability to encourage shared ownership. These provisions therefore provide for shareholders interests to reduce an emergence of agency problem.
The autonomous structure of the entity facilitates the function of the organization dual structure as a means of ensuring corporate success. The function of this structure is achieved through strategic approaches to reveal how an organization value system plays a role in its success. The principle consensus in the corporate law lies in the entity control responsibility and beneficence. The argument holds that corporate affairs should be conducted to enrich the interest of the shareholders as the “standard model.” The focus on the corporate affairs should liaise with the shareholders, other parties, and most of all the society. This shows that an entity operates within a jurisdiction of mixed control that need and demand contingence balancing.
The corporate theory however, offers more explanation in the needs to satisfy different criterion other than that of pointing out the relationship within the entity. The primacy of this lie beyond internal, to accommodate an extensive framework covering the creditors, especially in the form of capital distribution, labor laws, consumer laws, and public participative law such as environmental law. The shareholders globalization is regulated to embrace the influence of minorities and their protection in the investment and management decisions. This is based on the immutable maxim that the managers serve in the interest of all to reduce complex agency problem. Thus, the normative standard convergence shareholder model has helped large corporation ownership such as in UK and U.S. adopts influential criteria in structural ownership structures.
Akin to this is portraying of the change drive from the monotony of the past failure through liberal correctness and experiment especially in the U.S. from 1930’s, which paved the way for development of congress movement against absolute managerial corporate control in 1950’ and 1960’s – to reinforce discretionary power of corporate managers, for example SEC proxy rules and Williams Act. Experienced corporate relationships hike the development of trade unions to test the involvement of employees in corporate governance. This led to collective bargaining especially in most European countries such as Germany, where the form of codetermination, has encouraged great number of labor representation in corporate governance. This is an approach that lies outside the corporate law and seem as workable risk mitigation in labor context, though believed to add no value in strategic approach.
Implementation beyond corporate law encouraged governmental participation in corporate affairs to regulate the management influence through state sanctioned laws in protecting interests. The state - oriented model was successive in large corporations especially in postwar France and Japan though has lost control due to loss of state socialization especially in the global sudden collapse of communism from 1990’s. The visualization of stakeholder interests especially in the U.S. has advanced diverse solution in the corporate governance, including direct investors representation in corporate board and relaxation of board duties to expand the interest of the entire shareholders. Stakeholders’ representation will undermine the board decision making, which will remain costly to outweigh the gain of representation.
The excellent model recognized as appropriate is the shareholders model that encourages the force of logic, force of example, and force of competition. Force of logic encourages efficiency, representation, and maximization of stakeholders and shareholders’ value. Force of example involves comparison of common law jurisdiction such as U.S. that has performed strongly, in comparison with weaker economic performance of Germany, Japan, and French. The force of competition increases the competitive advantage in the global market through access to low cost equity capital, development aggressiveness, efficient operation and management as well as securing high percentage of equity investors, who are interested in maximizing returns.
Good corporate environment encourage public participation, disclosure transparency, regulation adherence, and legal corporate management in times of crisis and disputes. Different jurisdiction operates under different law, promoting global convergence fear. The change in corporate convergence will be achieved through controller’s agreement in a deep analysis criterion.
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